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California Auto Insurance Requirements
by Doug Cohen

Car insurance is mandatory in the state of California. The California Department of Motor Vehicles requires drivers to carry minimum liability insurance in the amount of $15,000 per person, $30,000 per accident, and $5,000 of property damage liability coverage.

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Purpose of the law

The purpose of the law is to ensure that vehicles driven on California roads have liability insurance that provides financial responsibility for any damage or injury caused by a traffic accident, regardless of fault, and to remove uninsured vehicles from the highways.

Mandatory vehicle registration financial responsibility requirements

Financial responsibility must be obtained and maintained on any vehicle operated or parked on California roadways and must be provided as specified below:

  • When requested by law enforcement
  • When renewing vehicle registration (if requested)
  • When the vehicle is involved in a traffic accident
  • Within 30 days of receiving a registration card for a newly acquired vehicle
  • Within 45 days of the cancellation of a policy for a currently registered vehicle

You must carry evidence of financial responsibility, proof of insurance, in your vehicle at all times.

Types of financial responsibility

  • A motor vehicle liability insurance policy
  • A cash deposit of $35,000 with DMV
  • A DMV issued self-insurance certificate
  • A surety bond for $35,000 from a company licensed to do business in California

For information regarding cash deposits, or self insurance, please contact:
The California Department of Motor Vehicles
Financial Responsibility MS J237
PO BX 942884
Sacramento, CA 94284-0884

Or you may call 916-657-6520 for questions and answers regarding car insurance coverage in the State of California.

To locate a company that issues surety bonds, you may contact the CA Department of Insurance at 1-800-927-4357.

Minimum liability insurance requirements for private passenger vehicles (California Insurance Code §11580.1b)

  • $15,000 for injury/death to one person.
  • $30,000 for injury/death to more than one person.
  • $5,000 for damage to property.

Liability insurance compensates a person other than the policy holder for personal injury or property damage (comprehensive or collision insurance does not meet vehicle financial responsibility requirements). Check your policy or talk to an insurance agent or insurance broker to make sure you have sufficient liability insurance coverage for each vehicle you own.

More information about low cost auto insurance is also available from the CA Department of Insurance.  Affordable car insurance is important and help finding discounts and other tips to save money on car insurance are also available here online on this website.

Acceptable evidence of financial responsibility

Your insurance company is required to electronically report insurance information for all private-use vehicle liability insurance policies. In some cases, however, you may also be requested to submit this information to the California DMV by providing:

  • A document or identification card from your insurance company indicating that your vehicle is insured. (Documents mailed to the California DMV will not be returned.)
  • A DMV authorization letter, if you are a cash depositor or are self insured.
  • California Proof of Insurance Certificate (SR-22) for broad coverage or owner's policy. (Operator's policy does not satisfy financial responsibility requirements.)
  • Evidence that the vehicle is owned or leased by a public entity defined in Government Code §811.2.
  • Motor carriers as defined in CVC §34601 may complete a statement of facts (REG 256) indicating that the carrier has evidence of insurance on file with the Public Utilities Commission or DMV pursuant to CVC §34630.

The following types of vehicles are NOT required to provide evidence of liability insurance to the California DMV:

  • Trailers
  • Off-Highway vehicles
  • Vehicles registered to a government entity (city, county, state, federal)
  • Special Equipment vehicles
  • Vehicles registered under a Planned Non-Operation status

If you fail to maintain financial responsibility / Car Insurance

  • Your driving privilege may be suspended. If you are involved in an accident and cannot provide evidence of financial responsibility, proof of insurance, you may lose your driving privilege for up to one year.
  • Registration of your vehicle will be subject to suspension (effective October 1, 2006). The California DMV will begin the process to suspend the registration of your vehicle if liability insurance is cancelled and a replacement policy is not submitted within 45 days, or your insurance company has not electronically provided evidence of auto insurance within 30 days of a registration card being issued on a newly acquired vehicle, or if you provide false evidence of insurance coverage.
  • You may be cited. Failure to provide evidence of financial responsibility, proof of insurance, when requested by a peace officer may result in a citation with fines that could reach $1,000 or more. (DMV cannot clear or sign citations relating to financial responsibility. Only a court can clear or sign these citations).
  • Your vehicle may be impounded. Failure to provide evidence of financial responsibility, proof of insurance may result in your vehicle being impounded, in addition to any fines.
  • You may be personally liable for damages. If you contribute to the cause of an accident and cannot provide proof of insurance or evidence of financial responsibility, you may be forced to compensate the other party for any injuries and damages.

If your vehicle registration is suspended, contact the Vehicle Registration Financial Responsibility Program at 1-866-664-4545. NOTE: Vehicle financial responsibility services cannot be completed at your local California DMV field office.

Here are some things you need to know about recent vehicle liability insurance changes:

  • As of January 1, 2006, every insurance company that provides car insurance to drivers in the State of California is required to report insurance status information to the California DMV for all private use vehicles (CVC §16058).
  • As of July 1, 2006, law enforcement and court personnel have access to DMV records to verify that your California registered vehicle is currently insured (CVC §16058.1).
  • Effective October 1, 2006, your vehicle registration is subject to suspension if the liability insurance is cancelled, OR if your insurance company has not electronically provided evidence of insurance when you purchase and register your vehicle, OR if you provide the CA DMV with false insurance information (CVC §4000.38).

What does this mean to the California car owner?

  • You will have a greater ensurance that the vehicle next to you on the road is covered by liability insurance.
  • You will have the opportunity to renew your registration online, over the phone, or at a self-service terminal.
  • You will not have to submit paper proof of insurance with your private-use vehicle registration renewal.

Remember, you must carry proof of auto insurance in your vehicle at all times.

Drivers involved in an accident that caused more than $750 (previously the law was $500 for accidents prior to January 1, 2003) worth of property damage or injured or killed any person must complete a traffic accident report form SR1 within 10 days of the accident.  From this you can obtain information about the other driver from the accident report that he or she submitted.  Also available are the other driver's insurance information and a photocopy of the accident report and/or certification that the other driver in the accident was not insured (Uninsured Motorist Certificate).

Caution to parents: Teen drivers often drive fast and due to their inherent lack of years of driving experience are known to have severe car accidents with often involve one or more fatality. So when it comes to auto insurance it is highly advisable to carry high limits of liability coverage. Property Damage liability is naturally the first liability coverage you will need if you or your teenager strikes and damages another car. Thus, try to carry as much Property Damage liability insurance as you can afford. If bodily injury occurs to the other driver or their passengers, or even if a pedestrian is struck by your car, and you or your teen drivers are found to be at fault, you will need to also buy as much Bodily Injury liability insurance as you can afford. Note, these two coverages, Bodily Injury and Property Damage liability, are sold and packaged up together. Example: $15,000/$30,000/$10,000 which is one of the lowest levels you can buy. Leased vehicles by comparison usually require lease holders to buy $100,000/$300,000/$100,000. You can even buy higher (Bodily injury and Property Damage) liability car insurance limits but that's typically considered reasonable by most standards which is why leasing companies require their drivers to set their limits at this level. The third number is the amount available to pay for any property damage you or your teenage drivers are responsible. The first two number are the amount available to pay per person, and per accident, respectively, for the bodily injury your car causes to others.

The point here simply is this. Your state may have a minimum liability insurance standard or minimum insurance requirement when it comes to car insurance but if your accident is severe enough, the state minimum insurance requirements for auto insurance simply may not be enough. What happens then? Are you willing to risk everything you have saved and for which you have worked so hard, so that one day you can pay it away to your victims in order to cover injuries or damages sustained as a result of your, or your teenage driver's accident? Why risk it? For very little incremental dollars more you may discover you can afford more car insurance than you first thought. So have your agent provide you with multiple comparison quotes when shopping and comparing auto insurance those quotes. A well informed insurance buyer is often a more socially (and personally) responsible insurance buyer. Happy shopping and happy driving with "peace of mind" that you and or your teenage drivers are adequately insured.

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